SSE: business as usual ‘not an option’ if 40-GW is to be achieved

15 Apr 2020by David Foxwell

SSE Renewables has challenged the government in the UK to establish a framework that will enable it to meet an ambitious target for 40 GW of offshore wind by 2020

In a statement, the company said, “Such a significant ramp up in deployment requires a corresponding increase in capabilities and co-operation across government departments as well as within the offshore wind industry.

“Business as usual is not an option. To this effect, we suggest a delivery plan is developed, building on the Offshore Wind Sector Deal but ensuring it is fit for achieving 40 GW.”

The company went on to set out a nine-point plan describing the main actions that would need to be covered in a delivery plan for 40 GW of offshore wind.

At the top of the company’s list is removing barriers to the consenting process. “The UK offshore wind industry is seeing more complex consenting issues, particularly with regards to cumulative impact issues on protected species and with respect to European Designations of Specially Protected Areas and Special Areas of Conservation,” said SSE. “There is a risk that future sites may end up with significant consenting issues or at best would see significant delay to the UK offshore wind aspirations.

To address this, SSE believes there needs to be development and adoption of a strategic level approach to Marine Spatial Planning and the Habitats Directive derogation process across UK Government, devolved administrations and industry. “This would not weaken environmental and species protection but would provide a more comprehensive approach than at present,” it said. It also believes there needs to be an assessment of the impact of all maritime industries with prioritisation for those industries contributing most to meeting the net zero objective, such as offshore wind and that the government needs to provide additional resource and expertise in key departments and delivery bodies to ensure timely and cost-effective consenting.

The company also highlighted reform of the design of the electricity market. “40 GW of offshore combined with a large amount of other zero/low marginal cost generation, such as onshore wind, solar and nuclear, is expected to have a significant impact on wholesale electricity markets, with an increasing number of periods of low or even negative wholesale electricity prices,” the company said.

“This will become an increasingly significant risk for the deployment of future offshore wind projects where merchant returns post-contract for difference (CfD) are a vital consideration for developers looking to submit viable bid prices in an increasingly competitive market. Long-term wholesale energy price expectations are a critical factor when considering project life extensions and repowering existing offshore windfarms after their subsidy ends.

“While the evolution of wholesale energy prices is uncertain, it would be prudent to undertake an in-depth assessment of whether policy and market design is fit for purpose. SSE encourages the UK Government to start this work now via its long-awaited Energy White Paper due in 2020, which will provide confidence to investors in offshore wind projects that there will be a long-term market framework fit for a net zero electricity system.”

SSE also wants the government to promote deeper cross-departmental collaboration and resource to mitigate aviation radar constraints. More than half of the new offshore wind sites currently planned to 2030 may interact with current aviation radar systems. The Offshore Wind Industry Council (OWIC) Aviation Task Force is seeking deeper co-operation with and between government departments (BEIS, the Ministry of Defence, Department for Transport and devolved administrations), the aviation sector and related stakeholders. “Government leadership is vital to delivering a framework for incorporating surveillance requirements that includes wind turbines within the baseline, to ensure the offshore and aviation sectors co-exist,” SSE said.

The UK also needs a more efficient approach to developing the grid infrastructure needed to integrate offshore wind into the electricity system, and SSE believes the ‘point to point’ approach to developing grid infrastructure under the current offshore transmission owner (OFTO) arrangements will not be fit for purpose for delivering 40 GW of offshore wind by 2030.

“It is not an efficient approach to grid planning; will add unnecessary cost and could present local acceptance problems longer term,” SSE said. “We should also be ensuring UK companies are able to compete for onshore connections in areas that already have higher density of network contracts in the global offshore wind industry.

“BEIS and Ofgem must adopt a more strategic approach to developing the offshore transmission network. This is highly likely to include the need for anticipatory investments in transmission infrastructure. The UK should collaborate closely with other North Seas countries on developing a meshed North Sea grid which would see our common goals to develop more renewable energy achieved more efficiently.”

SEE believes the revenue stabilisation provided via the CfD will continue to play a vital role in developers delivering low-cost projects and being able to secure project finance. However, it said, there is already a strong case for moving to annual CfD auction rounds from the current biannual approach, as it maximises deployment of projects by allowing them to enter as and when ready.

Achieving 40GW of fully constructed offshore wind projects by 2030, in SSE’s view, is impossible to achieve without annual auctions from 2025.

“Moving to annual auctions would avoid the rush to achieve consent which we have seen in recent years, which places an unnecessary concentrated burden on government consenting teams and statutory stakeholders. It also incurs unnecessary development expenditure for developers having to wait longer for an auction to come around. It would also be beneficial to the supply chain by providing more certainty and avoiding peaks and troughs in supply chain orderbooks.”

The company also wants to see more regular and increased seabed leasing volumes. It said that although upcoming seabed leasing rounds for offshore wind being conducted by The Crown Estate and Crown Estate Scotland are welcome, it believes they need to be built upon with a timetable set out for further regular leasing rounds in the 2020s. The volumes in the leasing rounds also need to be sufficiently large to support the deployment of offshore wind required beyond 2030 and factoring in that not all projects will be successfully developed.

Strategic investment in the supply chain is another key element in SSE’s roadmap to 40 GW of offshore wind by 2020. It continues to support and encourage the development of the UK offshore wind supply chain, including via its current offshore wind projects; funding to the Offshore Wind Growth Partnership; and broader involvement in the Sector Deal workstreams, to which it is committed.

However, SSE believes achieving significantly higher levels of UK content requires a strategic approach to investment from both industry and government in the facilities and capabilities needed to support the industry longer term. “We should also be ensuring UK companies are able to compete for contracts in the global offshore wind industry,” the company said.

It also believes a strategy for floating wind is needed and said it is highly likely that some floating wind will be needed to deliver 40 GW of offshore wind by 2030. Floating wind will certainly play a much more important role out to 2050 and beyond, it said. It welcomed the government’s manifesto commitment to enable floating wind but this should be followed up on with a fully developed strategy and accompanying policies as soon as possible. The policy framework should acknowledge that direct competition between fixed bottom and floating wind technologies is not feasible in the near term.

Last but by no means least, SSE highlighted that there is excellent wind resource around the whole of the UK but to date deployment has mainly been concentrated off the east coast of England. “As we move to much higher levels of offshore wind deployment, ensuring geographical diversity of the fleet will improve security of supply; help mitigate price cannibalisation and see industrial benefits spread more widely,” the company said.

“Currently, offshore wind projects not located near to the southeast of England and particularly those in Scotland, are at a significant competitive disadvantage because they face much higher transmission charges. SSE believes the locational element of transmission charging should be reviewed to ensure a levelling up between the southeast of England and the rest of the UK.

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